Vonage Shares Fall on Bankruptcy Warning

By IBT Staff Reporter04/18/07 AT 2:49 PM

Shares of Vonage Holdings Corp. (NYSE: VG) fell 6 percent on Wednesday after the company warned it could take itself into bankruptcy because of an ongoing legal dispute over patents with Verizon Communications Inc. (NYSE: VZ), according to a regulatory filing.

The warning was included in the company's 10-K filing with the Securities and Exchange Commission filed on Tuesday.

We are, and may in the future be, subject to damaging and disruptive intellectual property litigation that could materially and adversely affect our business, results of operations and financial condition, as well as the continued viability of our company, the company stated in the filing.

Vonage also cited risks of service interruption, and possible delisting from the New York Stock Exchange from a decline in its stock price.

In March, Verizon won $58 million in damages and an injunction against the Internet phone company after a court found that that technology used by Vonage to connect land-line phones to internet calls infringed upon three patents.

The court had initially barred the company from signing up new customers, however Vonage was granted a temporary stay of the injunction while it appeals.

Vonage fell 20 cents, or 6 percent to $3.11 in afternoon trading on the New York Stock Exchange.